TIDMQFI
RNS Number : 9930I
Quadrise Fuels International PLC
27 March 2018
27 March 2018
Quadrise Fuels International plc
("Quadrise", "QFI", the "Company" and together with its
subsidiaries the "Group")
Interim Results for the 6 month period ended 31 December
2017
Quadrise Fuels International plc (AIM: QFI) announces its
unaudited interim results for the 6 months ended 31 December 2017
and significant developments during the first quarter of 2018.
Operational Summary
Power Trial Project in the Kingdom of Saudi Arabia ("KSA")
-- As announced on 26 March 2018, the majority of agreements to
carry out the MSAR(R) 'Production to Combustion' trial have now
been signed, and during the first quarter of 2018, Quadrise
commissioned the MSAR(R) manufacturing facility on site at the
refinery counterparty. However, the signing of the fuel supply
agreement between the KSA oil company and the refinery counterparty
has not yet been achieved due to a delay in obtaining a
back-to-back trial agreement between the KSA oil and electricity
companies that will be involved in the trial.
-- As a result of this latest delay within the KSA, the Company
has been informed that the refinery counterparty has provided
notification to the KSA oil company that if the required signatures
are not obtained by 1 April 2018, then they may no longer be in a
position to support the production of MSAR(R) for the KSA trial.
The KSA oil company has now informed Quadrise that obtaining the
required signatures prior to 1 April 2018 is unlikely.
-- As a result, the MSAR(R) 'Production to Combustion' trial may
not proceed as planned as this was reliant on the fast-track
solution offered by Quadrise and its refinery counterparty.
-- As it is uncertain that the trial project will be going ahead
as originally planned, Quadrise is now focussing its resources on
other activities that can deliver meaningful progress. Further
options to continue this project will be explored in the event that
the 'Production to Combustion' trial project as originally planned
can no longer proceed, but all have uncertain outcomes in the
short-term.
Marine Business Development
-- Quadrise continues to be highly active in the marine sector
to progress new opportunities, participating at a large number of
industry events including bunker market/marine fuel forums in
addition to its direct contact with shipping operators.
-- Interest in Exhaust Gas Cleaning System ("EGCS" or
"scrubber") technology, as a compliance option for the IMO 2020
sulphur standards, has intensified during the period. Given the
widening price differentials between low and high sulphur fuels, we
believe the economic case for MSAR(R) will improve further moving
forward to 2020 and beyond and Quadrise is increasing its
engagement with shipping companies, engine and EGCS manufacturers
to exploit this.
Other Developments
-- Quadrise signed an MoA with JGC, one of the world's leading
engineering contractors in November 2017 and is working with JGC to
develop commercial opportunities for the production and use of
MSAR(R) , through its extensive network within the refining, marine
and power industries in Japan and other selected markets.
-- The Company continues to explore selected opportunities with
refinery and oil companies globally, linked to potential power and
marine supply opportunities to take advantage of IMO 2020 price
advantages for MSAR(R) fuel.
-- During the reporting period a number of actions were taken to
reduce expenditure, which collectively delivered annual cash
savings in excess of GBP500,000, representing over 18% of the
Company's fixed costs. In conjunction with these cost reductions,
we have also commenced the move of the Quadrise Research Facility
("QRF") to a new facility that will further reduce our fixed cost
base. These actions were structured so as to have no adverse impact
on Quadrise's ongoing operational and business development
capabilities.
Financial Summary
-- No debt and GBP3.4 million in cash reserves at 31 December
2017 (31 December 2016: GBP7.0 million).
-- Loss after tax of GBP2.0 million (2016: GBP2.4 million) of
which GBP1.1 million (2016: GBP1.3 million) relates to operational
production and development costs, and GBP0.8 million (2016: GBP1.0
million) to other administrative expenses.
-- Total assets of GBP7.8 million at 31 December 2017 (2016: GBP11.5 million).
-- Accumulated tax losses of approx. GBP47 million, available to
be carried forward against future profits.
Commenting, Mike Kirk, Executive Chairman of QFI, said:
"It is hugely disappointing that after several months of
discussions, and despite the assurances provided by our
counterparties in KSA, it has still not been possible to obtain the
signature of all the agreements needed to enable the 'Production to
Combustion' trial in the KSA to proceed. As a result of these
extended delays, our refinery counterparty has decided that if the
agreements have not been signed before 1 April 2018, then they may
no longer be in a position to support the project. Quadrise
understands that obtaining the necessary signatures prior this date
is unlikely, and therefore it is uncertain that the trial will
proceed as originally planned.
Whilst Quadrise will continue to review parallel options to
progress this project with an alternative refinery partner, this is
unlikely to be deliverable in the short-term. Quadrise are also
looking at alternative projects to establish MSAR(R) in the power
market, including those that could potentially use the MSAR(R)
manufacturing facility on site at our refinery counterparty. Our
refinery partners have continued to be very supportive of Quadrise
and we look forward to being able to discuss further potential
trial and commercial projects with them in due course. We are,
alongside this, continuing our existing business development
activities to build a series of MSAR(R) projects in both the power
and marine markets. This will include working with JGC to progress
opportunities in Japan and other selected markets.
In conjunction with the cost reduction initiatives previously
announced, we have also commenced the move of QRF to new premises
that will significantly reduce our fixed costs, without impacting
the ability to support our operational and business development
activities.
We still believe that our MSAR(R) technology has significant
potential but the lack of progress on the 'Production to
Combustion' trial project has significant implications for Quadrise
and we will be undertaking a strategic review to determine how best
to deliver this value for shareholders and will provide an update,
as appropriate, in due course."
This announcement is inside information for the purposes of
article 7 of Regulation 596/2014.
Notes to Editors
Quadrise is the supplier of MSAR(R) emulsion technology and
fuel, enabling a low cost alternative to heavy fuel oil (one of the
world's largest fuel markets, comprising over 450 million tons per
annum) in the global shipping, refining, and power generation
markets.
For further information, please refer to the Company's website
at www.quadrisefuels.com or contact:
Quadrise Fuels International Plc
+44 (0)20 7031
Mike Kirk, Executive Chairman 7321
Jason Miles, Chief Operating Officer
Nominated Adviser
Smith & Williamson Corporate Finance
Limited
+44 (0)20 7131
Dr Azhic Basirov 4000
Ben Jeynes
Katy Birkin
Broker
Peel Hunt LLP
+44 (0)20 7418
Richard Crichton 8900
Ross Allister
Public & Investor Relations
FTI Consulting
+44 (0)20 3727
Ben Brewerton 1000
Sara Powell
Chairman's Statement
Introduction
In the power market, as announced on 26 March, the majority of
agreements to carry out the MSAR(R) 'Production to Combustion'
trial have now been signed, and during the first quarter of 2018,
Quadrise commissioned the MSAR(R) manufacturing facility on site at
our refinery counterparty. However, the signing of the fuel supply
agreement between the KSA oil company and the refinery counterparty
has not yet been achieved due to a delay in obtaining a
back-to-back trial agreement between the KSA oil and electricity
companies that will be involved in the trial.
As a result of this latest delay within the KSA, our refinery
counterparty has provided notification to the KSA oil company that
if the required signatures are not obtained by 1 April 2018, then
they may no longer be in a position to support trial production for
KSA supply. Quadrise understands that obtaining these signatures
prior to 1 April 2018 is unlikely, and therefore the project may
not proceed as planned - as this was reliant on the fast-track
solution offered by Quadrise and its refinery counterparty, when
the KSA oil company was not able to secure in-Kingdom production
opportunities as originally envisaged.
Other options to continue this project with an alternative
refinery partner will be explored in the event the project as
originally planned can no longer proceed, but all have uncertain
outcomes in the short-term. Whilst it is disappointing that it is
now unlikely that the trial project will be going ahead as
originally planned, Quadrise will broaden its focus to progress
both this and other opportunities currently in development with
parties within KSA and in the wider region for both the power and
marine markets.
In the marine market, we continued to use the positive outcomes
of the Marine Operational and LONO trial to progress discussions
with operators currently using, or considering the use of exhaust
gas cleaning systems ("EGCS" or "scrubbers") as their preferred
route to IMO 2020 compliance. We saw increased engagement during
the period and as the deadline for implementation approaches there
appears to be an increasing trend in the interest shown by shippers
in EGCS technology - enabling them to use the lower-cost high
sulphur fuels post 2020 for competitive advantage.
Our agreement with JGC that was concluded in late November 2017
provides QFI with a significant enhancement to its business
development capabilities in key markets and we look forward to
developing this further during 2018.
Throughout the period we retained a tight control on costs
without adversely impacting our operational or business development
activities and this trend is expected to continue into the second
half of the financial year.
Power Generation MSAR(R) Fuel
The fact that the MSAR(R) 'Production to Combustion' trial
project may now no longer be proceeding as planned is hugely
disappointing. KSA remains the world's largest market for the
consumption of crude-oil and HFO for power generation, and in the
event the trial project does not proceed as originally planned,
Quadrise will continue to pursue opportunities there. These
opportunities include progressing the trial project with
alternative refining partners. The relationship between Quadrise
and our refining counterparty remains strong, and we look forward
to being able to discuss further potential trial and commercial
projects with them in due course.
We will continue to develop other opportunities in the power
sector in other selected markets in the Middle East, Africa and
Asia. Our relationship with YTL Power Seraya remains strong, though
the opportunities remain longer-term and linked to the availability
of suitable residue streams at a major refinery in the region and
the improved economics arising from 2020 oil product demand versus
competing fuels. Our work with significant oil majors and national
oil companies to evaluate the conversion of refining residue
streams for MSAR(R) production continues, and this also provides
opportunities to explore options for supply to gasifiers, fired
heaters, stationary diesel engines and steam and utility generation
plants.
Marine MSAR(R) Bunker Fuel
The inertia reported previously in the marine bunker market
improved during the period. There appears to be little appetite
amongst most refiners to make the investments necessary to produce
significant additional quantities of compliant low-sulphur fuel.
Recent policy proposals by IMO, prohibiting the supply and carriage
of non-compliant fuels for vessel engine or boiler fuel purposes
unless EGCS are installed, are projected to be in place from March
2020. This policy change, when approved by the IMO later this year,
will mitigate some of the concerns regarding IMO 2020
non-compliance. This development is already impacting the forward
price differential between gas oil and fuel oil for early 2020
which has now increased to $325-$350/t, further improving the
economics for both MSAR(R) and EGCS opportunities. Recent industry
commentary indicates that there is an acceleration in the uptake of
EGCS for both retrofit and new ship orders. Whilst there will be a
mix of compliance options, Quadrise and many market analysts
continue to believe that high sulphur fuel and on-board EGCS will
be the lowest cost option, although at this stage only a small
number of operators have confirmed their position. Recent
extensions of Emission Control Areas to ports in China, Hong Kong
and Taiwan are reportedly driving interest in EGCS solutions in
Asia.
In addressing the future marine bunker market, Quadrise will
continue to focus on producing MSAR(R) from the economical refinery
residue streams, where the fuel cost savings are likely to be
higher for consumers whilst also delivering material reductions in
NOx and particulates emissions which are likely to be of increasing
importance.
MSAR(R) Economics Remain Sound - Clear Growth Potential
The key value driver for MSAR(R) is the price differential, or
spread, between high sulphur fuel oil and low sulphur distillate
fuels. During the period, the spread has traded in the range of
$167/t to $244/t. The key factors that are expected to drive the
market in the run-up to 2020 are an increase in demand for low
sulphur distillate products in the marine bunker market and a
consequential reduction in demand for high sulphur HFO products
until EGCS are more widely adopted within the limited time
available. Forecasts in the market indicate that this is expected
to increase the spread to a range of $325/t to $350/t which
provides a significant opportunity for Quadrise and MSAR(R)
technology in both the power and marine markets.
Business Development
Quadrise enhanced its business development activities during the
period with the signing of the Memorandum of Agreement with JGC
Corporation, Japan's largest EPC contractor. JGC will act as QFI's
exclusive partner to work with prospective clients for the
production and consumption of MSAR(R) in Japan, Columbia, Peru and
selected other markets, on a case by case basis. This provides QFI
with access to JGC's considerable business development capabilities
and its extensive network of clients in key markets - providing a
material enhancement to its in-house business development
capabilities in a very cost effective manner.
Research, Development and Operations Activities
We have continued to invest in our research activities and we
are currently in the process of relocating our research facility,
to new premises that will significantly reduce our fixed costs,
with no reduction in our capabilities in terms of both research and
operational support.
Our work with the University of Surrey has continued to deliver
value for the Company.
Our technology partner, Akzo Nobel, with whom we have a Joint
Development Agreement and a Co-Operation and Exclusive Purchase and
Supply Agreement for the chemicals used to create MSAR(R) ,
continues to be supportive and we are working closely with them in
relation to the planned trial project and future potential
commercial opportunities in Saudi Arabia and other markets in the
region.
Financial Position
The Group recorded a loss of GBP2.0m for the six months to 31
December 2017 (2016: GBP2.4m). This included production and
development costs of GBP1.1m (2016: GBP1.3m) and administration
expenses of GBP0.8m (2016: GBP1.0m).
Basic and diluted loss per share was 0.23p (2016: 0.29p).
The Group held cash and cash equivalents of GBP3.4 million as at
31 December 2017, and continues to operate on a debt free basis
whilst maintaining a stringent control of costs.
The Group's total assets amounted to GBP7.8 million as at 31
December 2017 (GBP11.5 million as at 31 December 2016). Apart from
the cash and cash equivalents, this included fixed tangible assets
(mainly plant and equipment) of GBP1.0 million and MSAR(R) trade
name of GBP2.9 million.
Outlook - Current trading and prospects.
Despite the significant progress that was achieved on site
during the period on the MSAR(R) 'Production to Combustion' trial
project in the KSA, the ongoing delays in obtaining the contract
signatures led to our refinery counterparty issuing a deadline of 1
April 2018 for these signatures, beyond which they have stated they
may no longer be willing to support the project. Quadrise
understands that it is doubtful that the necessary signatures will
be achieved prior to this date, with the result that the trial may
now no longer be proceeding as planned. We will continue to pursue
projects in KSA, as the scale of the opportunity in the world's
largest oil-fired power generation market remains huge. Alongside
this, we will continue our discussions on other projects in the
wider region and further work alongside our new partners in Japan,
JGC, with whom we signed an MoU in November 2017, to pursue
opportunities in Japan and other selected markets.
Our work in the marine bunker market continues and we are
anticipating an acceleration of activity with operators who see the
use of high-sulphur fuel and EGCS as providing the lowest cost of
compliance with the IMO 2020 sulphur standards, as the
implementation deadline approaches.
We still believe that our MSAR(R) technology has significant
potential, but the lack of progress on the Production to Combustion
trial project has significant implications for Quadrise and we will
be undertaking a strategic review to determine how best to deliver
this value for shareholders and will provide an update, as
appropriate, in due course.
Mike Kirk
Executive Chairman
26 March 2018
Condensed Consolidated Statement of Comprehensive Income
For the 6 months ended 31 December 2017
Note 6 months 6 months Year ended
ended ended 30 June
31 December 31 December 2017
2017 2016 Audited
Unaudited Unaudited GBP'000
GBP'000 GBP'000
Continuing operations
Revenue - 68 126
Production and development
costs (1,107) (1,297) (2,367)
Other administration
expenses (830) (1,025) (1,818)
Share option charge (40) (162) (242)
Foreign exchange
loss (5) (6) (10)
---------------------------- ----- ------------- ------------- -----------
Operating loss (1,982) (2,422) (4,311)
Finance costs (4) (5) (10)
Finance income 16 6 19
---------------------------- ----- ------------- ------------- -----------
Loss before tax (1,970) (2,421) (4,302)
Taxation - - 213
---------------------------- ----- ------------- ------------- -----------
Total comprehensive
loss for the period
from continuing operations (1,970) (2,421) (4,089)
----------------------------------- ------------- ------------- -----------
Loss per share -
pence
(0.48)
Basic 4 (0.23)p (0.29)p p
(0.48)
Diluted 4 (0.23)p (0.29)p p
---------------------------- ----- ------------- ------------- -----------
Condensed Consolidated Statement of Financial Position
As at 31 December 2017
Note As at As at As at
31 December 31 December 30 June
2017 2016 2017
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Assets
Non-current assets
Property, plant and
equipment 5 1,024 1,086 1,056
Intangible assets 6 2,924 2,924 2,924
Non-current assets 3,948 4,010 3,980
----------------------------- ----- ------------- ------------- ---------
Current assets
Cash and cash equivalents 3,437 7,048 5,045
Trade and other receivables 245 263 302
Prepayments 98 130 153
Stock 61 69 61
----------------------------- ----- ------------- ------------- ---------
Current assets 3,841 7,510 5,561
----------------------------- ----- ------------- ------------- ---------
TOTAL ASSETS 7,789 11,520 9,541
----------------------------- ----- ------------- ------------- ---------
Equity and liabilities
Current liabilities
Trade and other payables 425 638 247
--------------------------- --------- --------- ---------
Current liabilities 425 638 247
--------------------------- --------- --------- ---------
Equity attributable
to equity holders
of the parent
Issued share capital 8,622 8,622 8,622
Share premium 73,642 73,642 73,642
Share option reserve 3,420 4,398 3,704
Reverse acquisition
reserve 522 522 522
Accumulated losses (78,842) (76,302) (77,196)
--------------------------- --------- --------- ---------
Total shareholders'
equity 7,364 10,882 9,294
--------------------------- --------- --------- ---------
TOTAL EQUITY AND
LIABILITIES 7,789 11,520 9,541
--------------------------- --------- --------- ---------
Condensed Consolidated Statement of Changes in Equity
For the 6 months ended 31 December 2017
Issued Reverse
share Share Share acquisition Accumulated
capital premium option reserve losses Total
GBP'000 GBP'000 reserve GBP'000 GBP'000 GBP'000
GBP'000
As at 1
July 2017 8,622 73,642 3,704 522 (77,196) 9,294
Loss and
total comprehensive
loss for
the period - - - - (1,970) (1,970)
Share option
charge - - 40 - - 40
---------------------- --------- ---------- ---------- ------------- -------------- ----------
Transfer
of balances
relating
to expired
share options - - (324) - 324 -
---------------------- --------- ---------- ---------- ------------- -------------- ----------
Shareholders'
equity at
31 December
2017 8,622 73,642 3,420 522 (78,842) 7,364
---------------------- --------- ---------- ---------- ------------- -------------- ----------
Issued Reverse
share Share Share acquisition Accumulated
capital premium option reserve losses Total
GBP'000 GBP'000 reserve GBP'000 GBP'000 GBP'000
GBP'000
As at 1
July 2016 8,096 69,216 4,704 522 (74,349) 8,189
Loss and
total
comprehensive
loss for
the period - - - - (2,421) (2,421)
Share option
charge - - 162 - - 162
--------------- --------- --------- ---------- ------------ ------------- ------------------
New shares
issued net
of issue
costs 526 4,426 - - - 4,952
--------------- --------- --------- ---------- ------------ ------------- ------------------
Transfer
of balances
relating
to expired
share options - - (468) - 468 -
--------------- --------- --------- ---------- ------------ ------------- ------------------
Shareholders'
equity at
31 December
2016 8,622 73,642 4,398 522 (76,302) 10,882
--------------- --------- --------- ---------- ------------ ------------- ------------------
Issued Reverse
share Share Share acquisition Accumulated
capital premium option reserve losses Total
GBP'000 GBP'000 reserve GBP'000 GBP'000 GBP'000
GBP'000
As at 1
January
2017 8,622 73,642 4,398 522 (76,302) 10,882
Loss and
total
comprehensive
loss for
the period - - - - (1,668) (1,668)
Share option
charge - - 80 - - 80
--------------- --------- --------- ---------- ------------ ------------- ------------------
Transfer
of balances
relating
to expired
share options - - (774) - 774 -
--------------- --------- --------- ---------- ------------ ------------- ------------------
Shareholders'
equity at
30 June
2017 8,622 73,642 3,704 522 (77,196) 9,294
--------------- --------- --------- ---------- ------------ ------------- ------ ----------
Condensed Consolidated Statement of Cash Flows
For the 6 months ended 31 December 2017
Note 6 months 6 months Year ended
ended ended 30 June
31 December 31 December 2017
2017 2016 Audited
Unaudited Unaudited GBP'000
GBP'000 GBP'000
Operating activities
Loss before tax from
continuing operations (1,970) (2,421) (4,302)
Finance costs 4 5 10
Finance income (16) (6) (19)
Depreciation 5 106 106 211
Share option charge 40 162 242
Working capital adjustments
Decrease/(increase)
in trade and other
receivables 57 34 (5)
Decrease/(increase)
in prepayments 55 (10) (33)
Increase/(decrease)
in trade and other
payables 178 62 (329)
Increase in stock - (69) (61)
----------------------------- ----- ------------- ------------- -----------
Cash utilised in
operations (1,546) (2,137) (4,286)
----------------------------- ----- ------------- ------------- -----------
Finance costs (4) (5) (10)
Taxation received - - 213
------------- -------------
Net cash outflow
from operating activities (1,550) (2,142) (4,083)
----------------------------- ----- ------------- ------------- -----------
Investing activities
Finance income 16 6 19
Purchase of fixed
assets 5 (74) (36) (111)
Net cash outflow
from investing activities (58) (30) (92)
----------------------------- ----- ------------- ------------- -----------
Financing activities
Issue of ordinary
share capital - 4,952 4,952
Net cash inflow from
financing activities - 4,952 4,952
Net (decrease)/ increase
in cash and cash
equivalents (1,608) 2,780 777
Cash and cash equivalents
at the beginning
of the period 5,045 4,268 4,268
----------------------------- ----- ------------- ------------- -----------
Cash and cash equivalents
at the end of the
period 3,437 7,048 5,045
----------------------------- ----- ------------- ------------- -----------
Notes to the Group Condensed Financial Statements
1. General Information
Quadrise Fuels International plc ("QFI", "Quadrise", or the
"Company") and its subsidiaries (together with the Company, the
"Group") are engaged principally in the manufacture and marketing
of emulsified fuel for use in power generation, industrial and
marine diesel engines and steam generation applications. The
Company's ordinary shares are quoted on the AIM market of the
London Stock Exchange.
QFI was incorporated on 22 October 2004 as a limited company
under UK Company Law with registered number 05267512. It is
domiciled and registered at Gillingham House, 38-44 Gillingham
Street, London, SW1V 1HU.
2. Summary of Significant Accounting Policies
2.1 Basis of Preparation
The interim accounts have been prepared in accordance with IAS
34 'Interim financial reporting' and on the basis of the accounting
policies set out in the annual report and accounts for the year
ended 30 June 2016, which have been prepared in accordance with
International Financial Reporting Standards as adopted for use by
the European Union. The interim accounts are unaudited and do not
constitute statutory accounts as defined in Section 434 of the
Companies Act 2006.
The same accounting policies, presentation and methods of
computation have been followed in these unaudited interim financial
statements as those which were applied in the preparation of the
Group's annual statements for the year ended 30 June 2017, upon
which the auditors issued an unqualified opinion, and which have
been delivered to the registrar of companies.
The interim accounts have been drawn up using accounting
policies and presentation expected to be adopted in the Group's
annual financial statements for the year ended 30 June 2018.
A number of new standards and amendments to standards and
interpretations have been issued but are not yet effective and in
some cases have not yet been adopted by the European Union. The
Directors do not expect that the adoption of these standards will
have a material impact on the financial information of the Group in
future periods.
The interim accounts for the six months ended 31 December 2017
were approved by the Board on 26 March 2018.
The directors do not propose an interim dividend.
3. Segmental Information
For the purpose of segmental information the reportable
operating segment is determined to be the business segment. The
Group principally has one business segment, the results of which
are regularly reviewed by the Board. This business segment is a
business to produce emulsion fuel (or supply the associated
technology to third parties) as a low cost substitute for
conventional HFO for use in power generation plants and industrial
and marine diesel engines.
The Group's only geographical segment during the period was the
UK.
4. Loss Per Share
The calculation of loss per share is based on the following loss
and number of shares:
6 months 6 months Year ended
ended ended 30 June
31 December 31 December 2017
2017 2016 Audited
Unaudited Unaudited
Loss for the period
from continuing operations
(GBP'000s) (1,970) (2,421) (4,089)
Weighted average number
of shares:
Basic 862,204,976 830,088,926 846,102,956
Diluted 862,204,976 830,088,926 846,102,956
Loss per share:
----------------------------- ------------- ------------- ------------
Basic (0.23)p (0.29)p (0.48)p
----------------------------- ------------- ------------- ------------
Diluted (0.23)p (0.29)p (0.48)p
----------------------------- ------------- ------------- ------------
Basic loss per share is calculated by dividing the loss for the
period from continuing operations of the Group by the weighted
average number of ordinary shares in issue during the period.
For diluted loss per share, the weighted average number of
ordinary shares in issue is adjusted to assume conversion of all
potential dilutive options and warrants over ordinary shares.
Potential ordinary shares resulting from the exercise of share
options and warrants have an anti-dilutive effect due to the Group
being in a loss position. As a result, diluted loss per share is
disclosed as the same value as basic loss per share. The 22.5
million share options issued by the Company and which are
outstanding at the period-end could potentially dilute earnings per
share in the future if exercised when the Group is in a profit
making position.
5. Property, plant and equipment
Leasehold Computer Software Office Plant Total
improvements equipment equipment and
machinery
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cost
Opening balance
- 1 July 2017 107 91 43 16 1,352 1,609
Additions - - - - 74 74
Disposals - - - - - -
----------------- -------------- ----------- --------- ----------- ----------- --------
Closing balance
- 31 December
2017 107 91 43 16 1,426 1,683
----------------- -------------- ----------- --------- ----------- ----------- --------
Depreciation
Opening balance
- 1 July 2017 (67) (47) (31) (15) (393) (553)
Depreciation
charge for
the period (12) (8) (2) (1) (83) (106)
Disposals - - - - - -
----------------- -------------- ----------- --------- ----------- ----------- --------
Closing balance
- 31 December
2017 (79) (55) (33) (16) (476) (659)
----------------- -------------- ----------- --------- ----------- ----------- --------
Net book value
at 31 December
2017 28 36 10 - 950 1,024
----------------- -------------- ----------- --------- ----------- ----------- --------
Leasehold Computer Software Office Plant Total
improvements equipment equipment and
machinery
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cost
Opening balance
- 1 July 2016 99 89 43 16 1,251 1,498
Additions 8 3 - - 25 36
Disposals - - - - - -
----------------- -------------- ----------- --------- ----------- ----------- --------
Closing balance
- 31 December
2016 107 92 43 16 1,276 1,534
----------------- -------------- ----------- --------- ----------- ----------- --------
Depreciation
Opening balance
- 1 July 2016 (46) (30) (24) (12) (230) (342)
Depreciation
charge for
the period (10) (9) (4) (2) (81) (106)
Disposals - - - - - -
----------------- -------------- ----------- --------- ----------- ----------- --------
Closing balance
- 31 December
2016 (56) (39) (28) (14) (311) (448)
----------------- -------------- ----------- --------- ----------- ----------- --------
Net book value
at 31 December
2016 51 53 15 2 965 1,086
----------------- -------------- ----------- --------- ----------- ----------- --------
Leasehold Computer Software Office Plant Total
improvements equipment equipment and
machinery
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cost
Opening balance
- 1 July 2016 99 89 43 16 1,251 1,498
Additions 8 2 - - 101 111
Disposals - - - - - -
----------------- -------------- ----------- --------- ----------- ----------- --------
Closing balance
- 30 June
2017 107 91 43 16 1,352 1,609
----------------- -------------- ----------- --------- ----------- ----------- --------
Depreciation
Opening balance
- 1 July 2016 (46) (30) (24) (12) (230) (342)
Depreciation
charge for
the year (21) (17) (7) (3) (163) (211)
Disposals - - - - - -
----------------- -------------- ----------- --------- ----------- ----------- --------
Closing balance
- 30 June
2017 (67) (47) (31) (15) (393) (553)
----------------- -------------- ----------- --------- ----------- ----------- --------
Net book value
at 30 June
2017 40 44 12 1 959 1,056
----------------- -------------- ----------- --------- ----------- ----------- --------
6. Intangible Assets
QCC royalty MSAR(R) Technology
payments trade and know-how Total
name
Unaudited Unaudited Unaudited Unaudited
GBP'000 GBP'000 GBP'000 GBP'000
Cost
Opening balance
- 1 July 2017 7,686 3,100 25,901 36,687
Additions - - - -
----------------- ------------ ---------- -------------- ----------
Closing balance
- 31 December
2017 7,686 3,100 25,901 36,687
----------------- ------------ ---------- -------------- ----------
Amortisation
and Impairment
Opening balance
- 1 July 2017 (7,686) (176) (25,901) (33,763)
Amortisation - - - -
Closing balance
- 31 December
2017 (7,686) (176) (25,901) (33,763)
----------------- ------------ ---------- -------------- ----------
Net book value
at 31 December
2017 - 2,924 - 2,924
----------------- ------------ ---------- -------------- ----------
QCC royalty MSAR(R) Technology
payments trade and know-how Total
name
Unaudited Unaudited Unaudited Unaudited
GBP'000 GBP'000 GBP'000 GBP'000
Cost
Opening balance
- 1 July 2016 7,686 3,100 25,901 36,687
Additions - - - -
----------------- ------------ ---------- -------------- ----------
Closing balance
- 31 December
2016 7,686 3,100 25,901 36,687
----------------- ------------ ---------- -------------- ----------
Amortisation
and Impairment
Opening balance
- 1 July 2016 (7,686) (176) (25,901) (33,763)
Amortisation - - - -
Closing balance
- 31 December
2016 (7,686) (176) (25,901) (33,763)
----------------- ------------ ---------- -------------- ----------
Net book value
at 31 December
2016 - 2,924 - 2,924
----------------- ------------ ---------- -------------- ----------
QCC royalty MSAR(R) Technology
payments trade and know-how Total
name
Audited Audited Audited Audited
GBP'000 GBP'000 GBP'000 GBP'000
Cost
Opening balance
- 1 July 2016 7,686 3,100 25,901 36,687
Additions - - - -
------------------ ------------ --------- -------------- ---------
Closing balance
- 30 June 2017 7,686 3,100 25,901 36,687
------------------ ------------ --------- -------------- ---------
Amortisation
and Impairment
Opening balance
- 1 July 2016 (7,686) (176) (25,901) (33,763)
Amortisation - - - -
Closing balance
- 30 June 2017 (7,686) (176) (25,901) (33,763)
------------------ ------------ --------- -------------- ---------
Net book value
at 30 June 2017 - 2,924 - 2,924
------------------ ------------ --------- -------------- ---------
Intangibles comprise intellectual property with a cost of
GBP36.69m, including assets of finite and indefinite life. QCC
royalty payments of GBP7.69m and the MSAR(R) trade name of GBP3.10m
are termed as assets having indefinite life as it is assessed that
there is no foreseeable limit to the period over which the assets
are expected to generate net cash inflows for the Group. The assets
with indefinite life are not amortised. The remaining intangibles
amounting to GBP25.90m, primarily made up of technology and
know-how, are considered as finite assets and are now fully
amortised. The Group does not have any internally generated
intangibles.
The Group tests intangible assets annually for impairment, or
more frequently if there are indications that they might be
impaired. As at 30 June 2017, the QCC royalty payments asset was
fully impaired and the MSAR(R) trade name asset had a net book
value of GBP2.924m. For the six month period to 31 December 2017,
there was no indication that the MSAR(R) trade name asset may be
impaired.
As a result, the Directors concluded that no impairment is
necessary for the six month period to 31 December 2017.
7. Available for Sale Investments
At the statement of financial position date, the Group held a
20.44% share in the ordinary issued capital of Quadrise Canada
Corporation ("QCC"), a 3.75% share in the ordinary issued capital
of Paxton Corporation ("Paxton"), a 9.54% share in the ordinary
issued capital of Optimal Resources Inc. ("ORI") and a 16.86% share
in the ordinary issued capital of Porient Fuels Corporation
("Porient"), all of which are incorporated in Canada.
QCC is independent of the Group and is responsible for its own
policy-making decisions. There have been no material transactions
between QCC and the Group during the period or any interchange of
managerial personnel. As a result, the Directors do not consider
that they have significant influence over QCC and as such this
investment is not accounted for as an associate.
The Group has no immediate intention to dispose of its available
for sale investments unless a beneficial opportunity to realise
these investments arises.
Given that there is no active market in the shares of any of
above companies, the Directors have determined the fair value of
the unquoted securities at 31 December 2017. The shares in each of
these companies were valued at CAD $nil on 1 July 2017. Shareholder
communications received during the period to 31 December 2017
indicate that the business models for each of these companies
remain highly uncertain, with minimal possibility of any material
value being recovered from their asset base. On that basis, the
directors have determined that the investments should continue to
remain valued at CAD $nil at 31 December 2017.
8. Related Party Transactions
Non-Executive Director Laurence Mutch is also a director of
Laurie Mutch & Associates Limited, which has provided
consulting services to the Group. The total fees charged for the
six month period to 31 December 2017 amounted to GBPnil (for the
six month period to 31 December 2016: GBP28k). The balance payable
at 31 December 2017 was GBPnil (as at 30 June 2016: GBPnil).
QFI defines key management personnel as the Directors of the
Company. There are no transactions with Directors, other than their
remuneration or as disclosed above.
9. Seasonality
The operations of the Group are not affected by seasonal
fluctuations.
10. Commitments and Contingencies
The Group and the Company have entered into a commercial lease
for office rental. This lease expires on 25(th) March 2019, and
there are no restrictions placed on the Group or Company by
entering into this lease. The minimum future lease payments for the
non-cancellable lease are as follows:
31 December 31 December 30 June
2017 GBP'000 2016 2017
GBP'000 GBP'000
Office premises:
One year 106 106 106
Two to five years 25 131 81
After five years - - -
The Group has no contingent liabilities as at the statement of
financial position date.
11. Copies of the Interim Accounts
Copies of the interim accounts are available on the Company's
website at www.quadrisefuels.com and from the Company's registered
office, Gillingham House, 38-44 Gillingham Street, London, SW1V
1HU.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR BRGDXSGDBGIL
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March 27, 2018 02:00 ET (06:00 GMT)
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